Defence expenditures, current account deficit and economic growth relationship: Case of NATO countries

There are very few studies in the literature on defense expenditures, current account deficit and its impact on economic growth. In this study, to investigate the relationship between NATO countries and the current account deficit and economic growth of defense spending for the 1990-2017 period, Turkey empirical analysis was carried out using annual data. In the analysis, NATO countries Emirmahmutoglu and Kose (2011) and Dumitreschu-Hurlin (2012) panels Turkey while investigating the causality tests, Hacker-Khatami (2006) Hacker-Khatami to determine the causality period between causality test and variables (2006) Bootstrap Toda-Yamamoto changing over time causality tests were used. As a result of the analyzes, it was concluded that one unit increase in defense expenditures increased economic growth by 0.878 units according to the first model where the GNP variable was taken as dependent variable by using CCE and CCEMG coefficient estimators for NATO countries. Therefore, it was found that there is a positive externality relationship between defense expenditures and economic growth. According to the second model in which defense expenditures are taken as dependent variables, a positive relationship was found between military expenditures and arms exports and imports. According to the panel causality test of Dumitreschu-Hurlin (2012), one-way causality relationship was found from current deficit to economic growth and from current deficit to military expenditures. In support of this result, Emirmahmutoğlu and Köse (2011) found a one-way causality relationship from economic growth to military spending, from current account deficit to economic growth, and from military expenditures to current account deficit. Hacker and Hatemi (2006) according to the causality test, defense spending in Turkey and neutrality of causality hypothesis in economic growth seems to be valid. Times to changing causality analysis to the economic growth of the current account deficit for the sub-periods between 1990-2017 in Turkey, 1993-2007 period other than the military spending of the current account deficit in other period 1995-2009 to the period of the current account deficit from military expenditure in the period and outside 1994-2008, 1995-2009 It is determined that there is a one-way causality relationship from economic growth to military expenditures. It is seen that the one-way causality relationship from defense expenditures to economic growth is valid in other periods except 1994-2008 period.